Federal Reserve chief to Congress: Shrink the deficit

Federal Reserve Chairman Ben Bernanke waded into politics Wednesday – but stayed in the shallow end. He avoided a partisan position, but made it clear that Congress needs to correct America's fiscal course.

Fed chiefs are always cautious about commenting on political matters, and this time was no different. But, even while Bernanke was wary of taking sides in a partisan debate, he appeared to urge action rather than inaction on deficits.

He wanted to avoid sending any signal that would appear to oppose or delay a fiscal course correction, he said.

"We currently have a fiscal deficit which is simply not sustainable over the longer term. And if it is not addressed it will have significant consequences for financial stability, for economic growth, and for our standard of living. It is encouraging that we are seeing efforts on both sides of the aisle to think about this issue from a long run perspective. It is not a problem that can be solved by making the case only for the next six months. It's really a long-run issue."

Earlier, he had argued that a "negative watch" on the US credit rating, announced in recent days by Standard & Poor's, showed that America's fiscal problems need to be addressed credibly and soon.